Global

Details

  • Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 10/23/2013

OECD - Request for submissions on PE-status avoidance strategies (BEPS) 

October 23: The Organisation for Economic Co-operation and Development (OECD) yesterday issued a request for submissions of a “short description of strategies” that might be considered to result in the “…artificial avoidance of the PE status in relation to base erosion and profit shifting”—BEPS.

Comments are due by 15 November 2013.

Background

In July 2013, the OECD released its BEPS action plan, identifying 15 actions to address BEPS in a comprehensive manner.


Action 7 of the BEPS Action Plan deals with strategies that result in the artificial avoidance of permanent establishment (PE) status and that raise base erosion and profit shifting concerns.

Request for submissions

In accordance with the BEPS Action Plan’s suggestion that work on the various action items could be carried on through focus groups composed of a relatively small number of delegates, a Focus Group on Preventing the Artificial Avoidance of the PE Status has been established to conduct the work required by Action 7. The Focus Group is composed of tax officials from various OECD and non-OECD countries.


As part of a consultation process, the Focus Group has invited interested parties to send, before 15 November 2013, a short description of strategies (other than commissionnaire arrangements, which have already been identified in the Action Plan) that might be considered to result in the artificial avoidance of the PE status in relation to base erosion and profit shifting.


The strategies will be examined by the Focus Group when considering proposals for changes to the definition of permanent establishment.


To narrow the scope of its work, the Focus Group will want to identify situations that may arguably result in the artificial avoidance of the PE status in relation to base erosion and profit shifting. Comments are not requested on: (1) whether work is needed in this area; (2) whether or not the strategies already identified in the Action Plan effectively result in the artificial avoidance of the PE threshold; (3) on ways to address perceived difficulties with the definition of permanent establishment; (4) on possible changes that could be made to that definition; or (5) on other aspects of the BEPS Action Plan.




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